Agent warns leasehold reforms will make current new build stock harder to sell

The Government has faced an almost immediate backlash after unveiling yet another consultation on leasehold reform.

A technical consultation on leasehold reforms was released yesterday, proposing a £10 cap on ground rents for all new leases and that new-build houses be sold as freehold.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, warned the £10 limit could make it harder for existing new-build home owners to sell their properties.

He told EYE: “This consultation will likely make it harder to sell existing new-build houses and they will probably suffer disproportionately on value.

“In order to counterbalance any detrimental effects on the wider market, which must be the aim in a low-transaction market, some of the other issues having a negative impact on the sale of leasehold need addressing, such as unreasonable charges for unnecessary repairs, lease extensions and minor changes, such as restrictions or bans on pets.

“But perhaps most of all the non-recognition of residents’ associations needs looking at so they can pursue cases in a more balanced Property Tribunal.”

Robert Haigh, director of valuation consultancy at Chesterons, added: “The Government’s announcement that ground rent will be capped at £10 per annum for any new lease granted on a flat or apartment can be seen as a positive for future buyer, and on the face of it removes the potential for abuse of the system by freeholders who have in the past inserted the infamous doubling ground rent clauses on compound basis. However, the concern is that the legislation won’t be far reaching enough.

“The removal of leasehold for houses in the majority of cases is undoubtedly a positive step for a leaseholder. However, the cap at £10 per annum for new leases on flats to me feels a little bit like a ‘knee jerk’ reaction with the government medalling in a largely sound system that has worked fairly for both leaseholders and freeholders for many generations, but has recently been abused by a few rogue landlords.

“I hope that the new regulations will be a benefit to the leaseholders of flats as well as houses but I am fearful that there will still be new loopholes that will be exploited by those who wish to do so.”

Leasehold reform campaigners were also dissatisfied with the lack of progress.

The Government first signalled its intention to reform the market in a White Paper in February 2017.

This was followed by a consultation in July 2017 and pledges to tackle leasehold abuse in 2017 by stopping the sale of new build leasehold properties.

The latest consultation will run for six weeks.

A statement from the National Leasehold Campaign said: “Ending the sale of new-build leasehold houses is taking far too long to legislate.

“New-build leasehold houses are just one facet of a catalogue of leasehold abuses affecting millions of leaseholders in England and Wales.

“The consultation offers nothing for the thousands of leaseholders caught up in the leasehold scandal, in unmortgageable houses and flats with high ground rent.

“More help is needed for leaseholders who are trapped in homes that were systematically mis-sold. Many will be unable to afford enfranchise or live in flats where enfranchisement is difficult and in some cases impossible.”

Sebastian O’Kelly, director of the Leasehold Knowledge Partnership (LKP), described the Government proposals as a “damp squib”.

He said: “Why £10? What is this for? Ground rents are for no designated service whatsoever. Just end them.

“This grandstanding by Government does not deserve a single headline. It is pathetic and only applies to houses.

“Even £10 is a danger for leaseholders. LKP is aware of debt collecting solicitors chasing these, and adding costs, getting them up to £600.

“What is needed is: stop creating more leasehold. Stop selling communal property tenure as a vulnerable tenancy – leasehold – which encourages unscrupulous conduct.

“Introduce commonhold, and get England and Wales in line with other countries in the rest of the world.”

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/748438/Leasehold_consultation.pdf

Sprift 3 end of article
x

Email the story to a friend

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.